Strategy & Sales |
Economics,
United States
23 March 2021 18:18
Authors
Kevin Cummins
Chief US Economist
Stamford
+1 2038972818
Contributors
{{contributor-span-repeater}}
If you wish to discuss the content of this article further, please contact your usual sales person. Reminder, clients of Natwest Markets NV should reach out to their relevant NV sales person.
|
Fed officials will blanket the newswires in the coming days, although we don’t expect a meaningful change in Fed messaging relative to recent communications. At last count, nine different members of the FOMC are due to deliver speeches (some multiple appearances) between today and Thursday—including the Fed Chair today with Treasury Secretary Yellen on the CARES Act. The Fed Chair continued to make the case for “patience”— reinforcing the dovish message from the FOMC’s updated dot plot (below). In his testimony, Powell said "We do expect that inflation will move up over the course of this year," but "our best view is that the effect on inflation will be neither particularly large nor persistent.” Of course, with so many officials sharing their views over the course of the next few days inevitably there will be some differing opinions on how patient the Fed will ultimately be. However, we suspect all members are in full agreement that they will be reactive and not proactive when they eventually hike rates and will need to see actual evidence and not just forecasts before liftoff begins. In fact, in an interview earlier on Tuesday, Dallas Fed President Kaplan (a non-voting FOMC member this year) noted that "there were some dots starting increases in 2022, and, you know, I'm one of those dots... I have a forecast for removing accommodation that's more aggressive than the median." President Kaplan also added that he will need to see "actual evidence...outcomes, not just strong forecasts" before tightening policy. Meanwhile, Fed Gov Brainard also spoke on Tuesday. She did not directly discuss the current economy or monetary policy. Instead, she focused her comments on climate change, and announced that the Fed has created a new committee—the Financial Stability Climate Committee—that is charged with "developing and implementing a program to assess and address climate-related risks to financial stability".
Please click here to find all of NatWest Markets’ Strategy and Sales commentary/ideas. You can also find out more about our electronic offering and credentials for Rates here and for FX here.
Invitation to consider a derivatives transaction This communication is prepared by the sales and trading desk or desk strategists and is marketing material, desk strategy and/or trader commentary. It does not constitute research. This material constitutes an invitation to consider entering into a derivatives transaction under U.S. CFTC Regulations 1.71 and 23.605, where applicable, but is not a binding offer to buy/sell any financial instrument. The views of the author may differ from others at NatWest Markets Plc, NatWest Markets N.V. and/or NatWest Markets Securities Inc. (collectively “NatWest Markets”).
|
This is not a research report.
This communication is not a “research report” as defined in Commodity Futures Trading Commission (“CFTC”) Regulations 1.71 and 23.605 promulgated pursuant to the U.S. Commodity Exchange Act and is not intended to provide information upon which to base a decision to enter into a derivatives transaction regulated by the CFTC. Any discussion in this communication of derivatives is limited to commentary on economic, political, or market conditions and statistical summaries of multiple companies’ financial data, which may include lists of current ratings. No investment decision should be made in reliance on this material, which is condensed, not comprehensive, and does not include all risk factors or other matters that may be material. This is not a recommendation or investment advice.
This communication is not a research report under the legal requirements in any country or jurisdiction designed to promote the independence of investment research. This communication is from Natwest Markets Securities Inc., (“NWMSI”) sales and trading desks. It is intended for sophisticated institutional investors only. This report is not subject to any prohibition on dealing ahead of the dissemination of investment research. All views or opinions herein are solely those of the author(s) as of the date of this communication and are not to be relied upon as authoritative. Any views expressed herein may not be objective or independent of the author or other NWMSI sales and trading desks, who are active participants in the markets, investments, or strategies referred to in this communication.
NWMSI is the US based affiliate of Natwest Markets PLC (“NWM PLC”) and is a broker-dealer and a member of FINRA and SIPC. For the avoidance of doubt, this material is not intended for persons who are Retail Clients within the meaning of the FINRA rules. US investors must effect any transaction in any security that is the subject of this material through NWMSI rather than NWM PLC. For more information, or to place an order for a security, please contact your NWMSI representative by telephone at 1- 203 897 6083 or by mail at 600 Washington Boulevard, Stamford, CT 06901, USA. The securities described herein may not have been registered under the Securities Act of 1933 (and, in such case, may not be offered or sold to US persons unless they are being sold in compliance with an exemption).
NWM PLC is a provisionally registered Swap Dealer with the U.S. Commodity Futures Trading Commission and is a member of the National Futures Association (“NFA”).